Dr Vino's wine blog

wine talk that goes down easy

I’ve never actually heard a wine store broadcast that message over a loudspeaker. But that’s the message some are sending with their pricing.

The other day, I found a great wine at the sharp price of $18.39 a bottle via a local wine store’s web site. When I dropped by, the wine was on the shelf for $22.99. I mentioned that I had seen it online for the lower price and the staffer, without hesitating, rang me up at the lower price, punching in a 20 percent discount. That’s the equivalent of the fifth bottle free!

We have discussed this issue before. Contrary to some perceptions, New York’s State Liquor Authority does not regulate the prices that retailers charge. Thus the dual pricing phenomenon persists, so consider this a friendly reminder: check the store’s website if you think the price looks high, are making a large purchase or buying an expensive wine. Internet shoppers tend to be more savvy thanks to the price-leveling power of google and wine-specific search tools such as wine-searcher.com. (Full disclosure: I make a tiny amount of money–-pennies, literally–-as an affiliate of wine-searcher.com.)

On the one hand, I understand why stores do this: An internet customer is a self-service customer who doesn’t tax the staff’s resources whereas an in-store customer might want to chit chat about which wine goes with chicken and take up the staff’s time. But it somehow feels a little dirty to have the dual price structure. Caveat emptor!

This entry was posted
on Friday, October 22nd, 2010 at 8:51 am and is filed under wine shops.
You can follow any responses to this entry through the RSS 2.0 feed.
Both comments and pings are currently closed.

38 Responses to “In-store wine customers: you are chumps”

I suppose it depends on the store’s strategy: they may be consciously driving business from the physical store to the internet. If, however, they intend to run both the shop and the web with different pricing strategies, and perhaps service strategies, it may make sense to have two different brands. Otherwise they are just dumping on their loyal physical store customers, which should eventually catch up with them.

Wow, as an owner of a retail store in New York I can promise we would never do that. We value all of our customers equally and to charge a different price online versus in store seems dishonest. We realize that online customers have more information at their disposal and can order from basically anywhere for delivery but the people that come in the store and want to talk about the wines are what makes this place tick.

It’s like that with tasting rooms too. Wineries don’t give you a discount for buying right on site — in fact, they make considerably more profit. There are plenty of good reasons to go to tasting rooms: unique wines not in distribution, ambiance, the chance to try before you buy. But you won’t save money.

Sounds like Dr. Vino has way too much time on her hands. I’d quit the job that only paid me “pennies”. If you have a problem with the store, why not name them, shop elsewhere, expose their supposedly fraudulent advertisement, instead of wasting your time being bitchy about it.

On a positive note become close friends with your favorite wine producers and let them know your budget and ask if they have any extra juice they want to bottle or any “shinners” (unlabeled bottles) they would like to get rid of. The economy is tough and everyone has juice just sitting around in their cellars. Wheel and deal, everyone has time to talk to you.

My negative comment: Am I interrupting your article correctly that you are saying it is “dirty” for private businesses to have the freedom and inalienable right to determine their own pricing mark up structure for their businesses and that instead the government should come in to a private business and dictate exactly what they must charge for each UPC? I am confused why governments who are by law “public servants” would get to dictate to the public how to operate their private property. Would it make more sense that every law, rule, regulation, registration, fee, fine and license created is in violation of the constitution and a infringement of individual, inalienable freedoms and self sovereignty. I thought the only purpose of government is to insure that one’s personal freedoms and private property rights are not infringed on. Why would one want to trust the cockroaches in governments around the world with so much god-like power? So the word “Soviet” means governance by a panel of unelected “experts.” So who would be the panel of “experts” who would deterine the proper world price for each bottle of wine? With the number of smart phones and internet users would it better to let wine consumers do their only homework and voluntary bartering their own deals instead of every one in a country, non-drinkers included, to have to pay tax money or have their fiat currancy inflated against their will to pay to enforce another anti-freedom law against alcohol retailers?

As a retailer (in Georgia) I find this article very disturbing. Many times these online stores don’t actually have in stock the wines that are advertised. They place a lower price, suck you in and then sell you something else. Also, for us in Georgia we at the retail level are taxed at a significantly different rate than online stores in FL, NY, CA. Our customers get mad when they see cheaper items online but many times they are lower than our wholesale cost. Finally, support your local retailers. If you discover a particular one cheats you, find one that doesn’t. Make friends with a great wine retailer and they will help you discover new wines as well as get you great deals.

This just goes to show that when you order direct, you are getting the better deal. Stores try to scam their customers for every cent they can, by claiming that is the cost of delivery, stocking, etc. In reality, they are charging more because people will pay more for buying in a store.

Tyler, that 18.39 dollars you paid at a store was marked up 20% from the cost of the bottle. No wine store will survive at that sort of mark-up, especially the honest wine shops that do not sell fake mass market wines. If you want a bargain, you should shop at a discount warehouse type of store where they have great selection of tired and well-cooked wines from Empire, Southern and Winebow.

Much of it has to do with location (ie, the cost of doing business, etc). Wine Library has used the 20% platform for years, and they seem to be doing well. What is a faulty model, and dishonest for their clients, is the penny pinchers on winesearcher.

Fluctuating your prices just to beat the other discounter is a dangerous game to play, inmy opinion.

Retailers and e-tailers that compete on price always lose out. There is always someone cheaper. Like myself, local retailers offer services that no online store can. Local support, professional wine advice and guarantees that can be immediately fulfilled, in-store tastings etc. If an e-retailer can offer a customer a tasting on line, I’d love to learn how to do it.

I live in Beijing and am often surprised to find it is the *importers* rather than the retailers they supply that sometimes have the worst prices. I’ve seen wines listed on an importer’s website for USD20 and then found it in retail for USD13. Seems some importers keep prices high to appease restaurants (it makes the markups appear lower) as well as the retailers (since online sales are still not very big here).

First, Doc you are a little off on this one. I would give the store the benefit of the doubt and say that they made an oversight not putting the website and store price the same. These things do happen. Second, Daniel you have drank the kool-aid if you think “Wine Library has used the 20% platform for years” I have been in the wine business in NJ for the last decade as a retailer and a wholesaler and I can tell you that is not true. I am not saying that they do not run a great store, but they mark up more than 20% on most items. It is simple; a retail store needs to operate on more than a 20 mark up as Oenophool said if they want to survive. If WL operated strictly by 20% they would not be able to pay for the electricity on their roughly 33,000 square feet store. Not all independents are good retailers and not all big box stores have great deals, whatever store it is that you are speaking of may not be focused, but that does not mean they are dishonest. As a retailer I take great care in setting my pricing and I also take great care in the service I provide. It is that service that I believe is worth an extra dollar. If you only buy lowest price and by scores you will miss out on a lot of great wine. It is the job of service oriented wine shops to sniff out great wines that no one has heard of yet. So to those of you who have the belief that a small reailer will gouge you on price then you are shopping in the wrong stores. Cheers

I should have made it clearer, while WL certainly does markup some things more than 20%, in general and in particular, when they were growing their business in the early years of this decade, just about everything was at 20%. Now, because of even greater competition, they along with some others, even go lower than 20%.

I agree with you that it is dangerous, particularly if you would like to actually make good money in this business. Nevertheless, one can look back at the WL prices of 2000-2005, and see most wines offered at 20% over cost.

Daniel are you in the business? Do you work for Gary? If you work for Gary than I understand. During the 2000-2005 they were without question one of the most aggressive discounters in the country, but they sold most name brand wines at 20% not most wines. This is a very important distintion due RIP’s and volume discounts that exist in the state of NJ. I have to ask where can I look back and see WL price and wholesale price to determine their pricing structure?

That expains it. There are huge differences in pricing structures between NY & NJ. We in NJ have the upper hand because of family plan discounts and as mentioned RIP’s (Retailer Incentive Program) Happy Anniversary by the way and I hope all is going well over these past 2 years of hell.
Cheers

I’d venture to say that few people who shop at that store read this site and few readers of this site shop at that smallish, out-of-the-wayish store. So I didn’t really see a lot of utility in calling out the store by name as opposed to flagging the phenomenon as a whole, since I’ve heard of more stores that do it.

And, no, I’m not in favor of government regulation of retail prices for wine. I’m just saying that if I were a casual wine drinker and had been buying a bottle or six per week after getting my groceries next door, then I found out that they were offering 20% reduced prices online, I’d be a little ticked. That builds alienation, not loyalty.

Oenophool — I fail to see how you would know the markup on the wine I bought since I didn’t name it. For what it’s worth, it was from a leading importer of estate-bottled wines; the wine is sold at 19.99 at several stores in NY that offer a case discount of 10%, thus $17.99 per bottle. Those stores still appear to be in business.

And I actually bought two different imported wines, from different importers, both marked down 20% on the web site (and, fortunately, at the register after mentioning the site).

Daniel and Gregg, thanks for your comments and discussing the different costs and incentives retailers have in NY and NJ. And, yes, congratulations Daniel on your 10th anniversary!

Considering the current state of the economy and retail wine shops, this is just bad business. You are basically taxing people for being customers and giving you the opportunity to upsell, not only product but yoru services as well. All of this during a time when customers are sometimes hard to come by.

This same issue takes place in the fine dining industry as some restaurants have raised prices to make up for the lack of traffic to cover for spoilage and staff costs, in essense taxing the people who actually come in for dinner.

Yeah, I recently reviewed Cakebread chardonnay, and found it in one store for $53, another for $40, and online for $32. What the heck!? I know it’s not the same problem you’re talking about, but this kind of variation also feels scummy, to me.
-Wineguider

Wineguider – Prices can vary widely for a number of reasons, especially if they are retailers in different states. Wholesale prices may vary by state so, to continue with your example, Cakebread’s wholesale cost may even be above a retail cost in another. That’s one reason it is good to have the ability to buy wine from retailers in different states, a right that is under some threat now in Congress.

So yes, a pretty different situation from the one I encountered at one store.

Tyler’s example of taxing for the sake of additional cost of human interaction is a real issue.

The huge variation of cost is something that is very different. Many factors come into play. The primary is the motives of owner. In some cases, a shop may be trying to simply move inventory to free up capital, another may be slashing prices due to lack of demand for certain wines.

Outside of Cakebread, Silver Oak AV and Duckhorn has had to deal with less than stellar reviews which has significantly weakened demand in some markets (city/town, regional, etc). In some markets, there is still strong demand for these wines, so the prices have remained at normal levels. However in others you can find these same bottles at 30-40% off in most.

In cases like these, I think it’s the consumer job to be savvy. I don’t think it is scummy at all. If the shops are in the same market, there is usually a reason for the discrepancy or one or more of them is clueless as to what the competition is doing.

I find it a perfectly acceptable practice, though 20% seems a bit excessive as the difference. We do the same in many industries – it’s often far less expensive to make your own travel arrangements – airfare, hotels, rental cars – than it is to tie up an employee’s time. Many of the grocery stores that offer online “self-shopping”, have online only discounts. Why not with wine?

I have no idea what Liberty Travel in particular does, but, there are generally discounts when you go directly online to an airline, hotel, or car rental – or to a service like Travelocity or Expedia. The point is, it’s common practice in many industries to offer a discount for self-service, and something that is part of our culture. It is apples to apples – as I said, many grocery stores do it as well. If you’re going to limit your purview to only small retail wine shops, it becomes a silly conversation. Having worked retail wine sales, I can tell you that the amount of time spent by a salesperson with a typical in-store customer is probably about 10-15 minutes on average – if someone orders their stuff online, it can often be packed up by someone other than a salesperson (i.e., let’s face it, a lower paid stockperson), and probably takes no more than 2-3 minutes. And that frees up the salesperson to focus on the in-store customers, giving them more attention, and yes, perhaps, depending on the store, at a premium. The fact that they store that Tyler went to gave him the discount when he brought it up is a plus on their part – they could have just as easily said, as some other industries would, that that price was only for online purchases.

Okay, you are correct on Travelocity/Expedia, but the airlines, hotels, car rental services do have brick and mortar, and yes, they have a lower price. I have no idea what peapod is, but I know that when I was living in NYC, the local groceries that offered online shopping did have a lower price for many things bought online, and often had special promotions that were online only. It’s also not something new in the wine retail world, at least going back as far as an internet presence existed for many stores – internet only promotions have been a part of the business for at least the last 7-8 years, probably longer. And yes, it is typical in many retail businesses to offer a discount, or special promotions, to online shoppers versus in-store shoppers. Maybe not where you live, I don’t know, but everywhere I’ve lived, yes.

How about the consideration of the hopefully informative, helpful staff in the store? An excellent salesperson is valuable for those who do not know exactly what they are looking for and need help. I know plenty who know what they love, but don’t have time and appreciate a professional to guide the buying experience. Worth every penny for someone knowledgeable and friendly. Those that know exactly what they are looking for and have more time can bargain hunt.

The logic can be found behind both scenarios – cost on Internet can be higher or lower then cost in the same “brick and mortar” store. Of course the best case is when prices match. I know of the stores in New Jersey where situation is actually opposite to the one describer. Wine Buyer is online store for Bottle King, and I had being many time in the situation when the the same wine can be found cheaper in the store than online (but the inventory don’t always match). And in general, the online store is expected to be used by the customers who can’t physically come into the store…

I had a similar experience at a store in NYC. I had seen via wine-searcher and their website that they had something I wanted at a great price, but when I went in, it was marked 10% higher on the shelf. OK, so I brought it up to the counter, and was told “that’s the web order price, not the in-store price.” A little irritating, so I said, well, then, I’ll just place the order on the website and I’m already here to pick it up. Nope, can’t do it, it takes 24 hours to process the web order and you’ll have to come back tomorrow. By now I’m pretty annoyed, and the manager explained to the clerk that if a customer knows the web price, they’ll honor it on the spot, which seems fair, but it still left a feeling that their practices are somewhat unsavory.